TIDMCMET
Capital Metals PLC
17 March 2021
17 March 2021
Capital Metals plc
("CMET" or the "Company")
Mineral Sands Market
Developing the Company's Eastern Minerals High Grade Mineral
Sands Project in Sri Lanka
Highlights
-- Products focused on extremely large established markets with
annual growth rates of between 4.3% and 8.6%, due mainly to
urbanisation and industrialisation in emerging countries, as well
as more innovative uses of the materials
-- Strong environmental credentials with comprehensive
assessment completed , non-chemical processing, no toxic reagents
and straightforward, continuous site rehabilitation
-- Current resource from over 1,600 holes drilled to date, means
we have a Resource big enough for a mine today
-- 85% of the Resource is classified in the higher level
'Measured' and 'Indicated' categories of the JORC code
-- Strong potential to increase the already very high grade
(17.6% THM) Resource given only 10% of our initial permits have
been drilled and drilling has only gone to an average depth of 3m -
for example, two holes in 2018 showed 14m at 26.3% THM & 8m at
26.6% THM
Capital Metals plc (AIM: CMET) is a natural resources company
focused on the development of the Eastern Minerals Project in Sri
Lanka ("the Project"), one of the highest-grade mineral sands
projects globally. The Company is pleased to provide the following
background information on the mineral sands market and the
Project.
Mineral Sands Market
Mineral sands products - ilmenite & rutile (together
titanium dioxide minerals), zircon and garnet - are an integral
part of everyday life.
The key end products in the mineral sands market are:
-- All paint used in the world - contains titanium dioxide
(TiO2) found in ilmenite and rutile.
-- The world ceramics industry including materials required for
housing and construction (bathrooms, tiling, kitchens) - require
zircon.
-- Garnet - has a range of industrial applications in the
abrasives markets, such as sand paper, sand blasting and cutting
steel with water jets and significantly increasing use in metal
fabrication.
These minerals are also used in many other areas, including high
end titanium metal, industrial chemical applications and chemical
industries. However, the paint (TiO2) and ceramic (zircon)
industries are the main end users. It is anticipated that both of
these industries will be well supported during all the global
stimulus initiatives that are underway.
The global market for mineral sands has been growing steadily
with solid price increases over the last 5 years.
The global paints and coatings market size was valued at USD
146.2 billion in 2019 and is expected to grow at a compound annual
growth rate (CAGR) of 4.3% from 2020 to 2027. The market is
expected to be driven by the increasing product consumption in the
construction, automotive, and general industries application
sectors. Rapid urbanization and industrialization in the emerging
countries, such as India, China, and Southeast Asia, are
anticipated to fuel the product demand in various
applications.(1)
The global ceramics market was valued at USD 229.1 billion in
2018 and is projected to grow at lucrative CAGR of 8.6% from 2019
to 2025. Increasing government spending on infrastructure and
rising construction activities around the world are the key drivers
for the market.(2)
The global abrasives market size is projected to grow from USD
46.4 billion in 2020 to USD 58.0 billion by 2025, at a CAGR of 4.5%
from 2020 to 2025. The growth of this market is attributed to the
growing automotive, metal fabrication, machinery, electronics,
electrical, medical, and construction industries.(3)
The industry growth and pricing did pause in 2020 due to
COVID-19, however the medium-term growth outlook is positive due to
economic stimulus activity as well as decreasing supply from
existing mines which may not be fully replaced by future projects.
The interest CMET has received from potential buyers for its
products supports this global outlook.
This supply issue is important as opening up new mines is not
something that happens overnight. Years of time and effort
including, drilling, test work, technical and ESG studies must be
undertaken before a mining project can move into production.
Large High-Grade Resource with Significant Growth Potential
Over the last 5 years, CMET has privately advanced the Project
to the state it is in today. Having already completed many of the
required technical workstreams, management are now focused on
getting the Project into production as soon as possible, placing
CMET well along the Project development curve.
One of the primary workstreams for any mining project is the
resource estimate which requires drilling. A significant drilling
program has already taken place at the Project with over 1,600
holes drilled.
The drill results were used to estimate an initial resource of
17.2Mt of at 17.6% THM. This resource estimate makes the Project
one of the highest-grade mineral sands' deposits in the world. The
extensive drilling also means that 85% of the resource estimate was
classified in the higher level measured and indicated categories of
the JORC code.
A key benefit of mining high grade mineral sands is the
potential for greatly improved economics as capital intensity is
generally low. The mine size (and capex) is lower as you need to
mine and process less material to produce the same amount of
product. Our recent analysis of other deposits around the world
shows that our project has one of the highest grades, being nearly
3 times the average grade of all the deposits of approximately 6%
THM.
Whilst the current resource estimate is large enough to develop
a mine, we are very excited about the potential to increase this
resource. CMET's current resource estimate used shallow Auger
drilling to an average depth of only 3m and most holes finished in
mineralization. CMET's 2018 drill program (using its Sonic Drill
rig) proved the mineralization continues at depth and produced some
spectacular results including 14m at 26.3% THM & 8m at 26.6%
THM. In addition, we have explored less than 10% of CMET's initial
licenses (EL168 and EL199).
It is difficult to estimate the resource upside at the moment as
there are many exploration opportunities to pursue, but CMET
believes a multiple upgrade in resource tonnage is feasible.
Environmental, Social & Governance ("ESG") Credentials
CMET has been undertaking environmental assessments, planning
and community consultation for over 6 years. The Project's
Environmental Impact Assessment report is in the final stages of
approval with the Sri Lankan authorities.
It is proposed to extract the economic mineral sands using
proven non-chemical processing methods with continuous
rehabilitation of the mined areas. The environmental management
when operational, benefits from the low levels of slimes (fine
grained material) within the resource which simplifies the
rehabilitation activities.
The Board members and management of CMET are very pleased about
the potential of the Project as it enters its next phase of
development and look forward to updating shareholders on our
progress in the coming weeks and months.
For further information, please visit www.capitalmetals.com or
contact:
Capital Metals plc Tel +44 (0) 20 7317 6800
Michael Frayne (CEO)
SPARK Advisory Partners (Nominated
Adviser)
Neil Baldwin / James Keeshan +44 (0) 20 3368 3554
Brandon Hill Capital Limited
(Broker)
Jonathan Evans/Oliver Stansfield +44 (0) 20 3463 5000
Glossary:
Auger Drilling: is done with a helical screw which is driven
into the ground with rotation; the earth is lifted up the borehole
by the blade of the screw. Used in s oil, soft unconsolidated
formations, or weak weathered rock
JORC: the JORC Code provides minimum standards for public
reporting to ensure that investors and their advisers have all the
information they would reasonably require for forming a reliable
opinion on the results and estimates being reported. The current
version is dated 2012
Sonic Drilling: an advanced form of drilling which employs the
use of high-frequency, resonant energy generated inside the Sonic
head to advance a core barrel or casing into subsurface
formations.
THM: Total Heavy Minerals
Data Sources
(1)
https://www.grandviewresearch.com/industry-analysis/paints-coatings-market
(2)
https://www.grandviewresearch.com/industry-analysis/ceramics-market
(3)
https://www.marketsandmarkets.com/Market-Reports/abrasives-market-16531756.html
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